Ms. Guillerma E. Puno

July 27, 2007 BIR RULING [DA-421-07] DA 416-03 Ms. Guillerma E. Puno c/o 135-C Villareal Street Pasay City M a d a m : This refers to your letter dated March 6, 2007 which was referred to this Office by Atty. Alberto R. Bomediano, Jr., Chief of the Legal Division of Revenue Region No. 8, Makati City dated May 31, 2007, for confirmation of the opinion of Regional Director Atty. Nelson M. Aspe dated May 21, 2007, where it was held that "IN VIEW OF THE FOREGOING, the sale of real property by Insular Life Assurance Company Limited/Filipinas Life Assurance Company in favor of Mr. Jose C. Vergara, covered under the Deed of Sale with Mortgage executed on May 13, 1977, is not subject to the 6% capital gains tax. However, the same shall be subject to the ordinary income tax and to the documentary stamp tax plus the corresponding penalties and other charges thereto from the date of execution of the said Deed until finally paid based on the law then prevailing. ( BIR Ruling No. 047-98 dated April 14, 1998 )" It is the firm stance of this Office that since the Deed of Sale, which is certified as true copy of the original, was executed and notarized prior to the effectivity of B.P. Blg. 37, which took effect on September 7, 1979, subjecting the gains from the sale or transfer of real property classified as capital assets to the 5% capital gains tax under Section 21 (e) of the Tax Code of 1977, as amended, the rules on the kind of tax, rate of tax, zonal or fair market value obtaining at the date of notarization on May 13, 1977, shall be applied in accordance with the provisions of Revenue Memorandum Circular (RMC) No. 34-91, as clarified in RMC No. 43-91. IHaSED SUCH BEING THE CASE, this Office hereby confirms the opinion of Regional Director Atty. Nelson M. Aspe that the sale of real property by Insular Life Assurance Company Limited/Filipinas Life Assurance Company in favor of Mr. Jose C. Vergara is not subject to the 6% capital gains tax but the same shall be subject to the ordinary income tax and to the documentary stamp tax plus the corresponding penalties and other charges thereto from the date of execution of the Deed of Sale until finally paid based on the law then prevailing. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service